It has been on the table since 2010 as a very important strategic initiative. It was first proposed by the Planning Commission to support Indiaís energy security and its growth plans by acquiring energy assets abroad.

Contours of the fund:

The fund will be financed essentially through the budget. The government is thinking of central allocation of about Rs 4,500 crore in the first year.

The Empowered Group of Ministers meeting, which was supposed to happen on Tuesday, was later deferred because of the political situation. The EGoM will meet and discuss this. But if you do see the fund being set up in the next one year, there is a large possibility of this being done in the budget.

As per the current proposal, the government is thinking of budgetary support for the fund of about Rs 4,500 crore. It will be a rupee fund and forex will have to be bought from the open market.

Also, the budget division has proposed that large PSUs such as ONGC have reserves that can be used by this fund for acquiring energy assets aboard. So that could be a second source of funding.

The third source of funding could be, which was the Planning Commissionís proposal, RBIís forex reserves. But that is still something that has to be debated and may be some thing the RBI may not be in favour of.